Although we wish Federal prosecutors well in their efforts to root out insider trading, we won’t be too terribly surprised if the five alleged insiders charged Thursday in a high-profile case beat the rap. It’s like trying to root out corruption in places like Kazakhstan or Louisiana, where graft is a way of life. A jury of one’s peers in Baton Rouge probably thinks it’s got better things to do than convict someone who did someone else a “favor” for money. The five men charged yesterday are all connected to a Mountain View, CA, firm called Primary Global Research. The company advertises itself as an “expert network” firm, which is another way of saying they’ve got some well-placed eyes and ears in the corporate world. For a fee – often, apparently, a large one – the firm would patch clients into a teleconference or bring them face-to-face with someone who would not merely be guessing when he quoted current sales figures for, say, AAPL or Dell.  We lived in Mountain View ourselves for four years and never even heard of the company.  Ahh, if only we’d known!

We’ve always wondered how the regulators choose their targets. There is so much “good information” out there, and so many ways to come by it, that ten-thousand prosecutors working for a thousand years would not exhaust the supply of potential felons. In the meantime, the real insiders have at times seemed to have gotten away with murder by operating in the open. Bear Stearns, for instance.  The late, great investment firm served for a while as investment banker to Resorts International, the first company to open a casino in Atlantic City.  At the time, we were working in the options pits of the Pacific Stock Exchange, making markets in put and call options on, among other stocks, Resorts International. To say that Bear Stearns traded Resorts options knowledgeably would be a gross understatement. They were bloody geniuses, they were, and they leveraged information on Resorts by buying or selling options with uncanny timing. They went a step too far one Friday afternoon, though, when they effected a large trade one minute before the final bell. Our reaction was not to call a prosecutor, but to let Barron’s in on the story. Bears’ shenanigans were duly reported in “The Striking Price” column the next day, and Bear retaliated by taking it “out in the alley,” so to speak. Their lead broker on the Pacific Exchange was a 350-pound behemoth, and whenever we passed him in the crowded aisles of the exchange floor, we were wary of the stake-sharpened pencil he wielded like a weapon.

Perhaps Primary Global’s insiders should have to get in the ring with whoever the aggrieved investors are in this case. That’s assuming federal investigators can find any.